Branded residences are generating the most compelling risk-adjusted returns in hospitality real estate. The developers who understand the structure are using them to effectively build hotels at net zero cost.

*The branded residence premium is not a marketing achievement. It is a structural feature of how hotel brand equity translates into real estate value. (photo: Aman Residences Marrakech)*

Over 700 branded residence schemes are currently operating globally. An equal number are in development. That is not a coincidence or a trend driven by consumer preference alone. It is a response to a financial structure that sophisticated developers have recognized as one of the most capital-efficient mechanisms available in real estate: the ability to monetize hotel brand equity through residential pre-sales, recover construction capital before the hotel opens, and retain the long-term income stream that the hotel generates on a basis that has been substantially de-risked by the residential component.

A well-structured branded residences strategy does not add a residential component to a hotel project. It restructures the entire capital thesis of the development. The premium that branded residences command over unbranded comparable product, which averages 33 percent globally and exceeds 47 percent in emerging markets according to Savills research, changes what the developer needs from the hotel to make the overall project work.

The Financial Structure: How the Premium Changes the Development Math

The most important financial feature of a branded residences strategy is timing. Residential pre-sales generate capital at a point in the development timeline when the hotel component is consuming capital rather than producing it. Deposits of 30 to 70 percent on residential units, collected before construction completes, can fund subsequent construction phases, reduce the debt load on the overall project, and in the most favorable structures eliminate the need for construction debt entirely.

The arithmetic is worth making explicit. A 300-key hotel that costs $150 million to develop and stabilizes at $12 million of annual NOI generates a 7.3 percent development yield on cost. The same hotel developed alongside 150 branded residences that generate $90 million of pre-sale proceeds and $45 million of net developer profit is effectively a $60 million hotel investment generating the same $12 million NOI: a development yield of 20 percent. The residential component did not just pay for itself. It changed the return profile of the entire project.

In the right structure, branded residences do not just add a revenue stream. They change what the developer needs the hotel to achieve to make the entire project work.

What Drives the Branded Residence Premium

The branded residence premium is generated by three factors specific to the hotel brand context that cannot be replicated by residential developers working outside of it. The first is service infrastructure. A branded residence buyer is purchasing access to hotel-grade service: concierge, housekeeping, F&B delivery, maintenance, and the operational platform that makes a residence genuinely turnkey in a way that standard luxury residential management cannot match.

The second is brand credibility. The hotel brands commanding the strongest residence premiums have spent decades establishing what their name means. A buyer who purchases a Four Seasons or Aman residence is buying into a brand promise validated by millions of guest experiences across dozens of properties worldwide. The third is the rental management ecosystem. Many branded residence buyers participate in the hotel's rental management program, generating income when not in residence through distribution channels that a standalone vacation rental cannot access.

Brand Selection: The Decision That Most Determines Outcome

The brand selection decision in a branded residences strategy is the highest-leverage choice a developer makes, and the most consistently under-analyzed. Most developers approach it as a negotiation about fees and standards. The developers generating the best outcomes approach it as a strategic alignment question: which brand's equity, distribution, and buyer profile creates the strongest premium in this specific market, at this price point, for this buyer?

The Aman brand commands extraordinary premiums where ultra-high-net-worth buyers are the primary target, but its buyer profile is narrow enough that it is not the right answer for projects with broader residential sales targets. A Rosewood or Four Seasons brand may generate a smaller premium in percentage terms but deliver it across a larger pool of buyers in more markets. The brand selection decision also needs to account for exclusivity provisions that prevent the brand from licensing competing residential developments within a defined radius.

For how branded residences fit into the broader mixed-use development structure, see the mixed-use hospitality strategy

*The branded residence buyer is not purchasing real estate. They are purchasing access to a service platform that residential developers cannot build independently. Bulgari Hotel & Residences London*

The Governance Architecture That Protects the Premium

The premium that branded residences command at sale does not automatically maintain itself over time. Resale values depend on the ongoing quality of the hotel's service delivery, the maintenance of the physical asset, and the continued relevance of the brand. Developers who have not structured the governance of the branded residence program with sufficient care discover that unhappy residence owners, declining service standards, or brand equity erosion can compress resale values in ways that create legal and reputational exposure long after the original sale.

The governance architecture that sophisticated developers are using separates three distinct sets of responsibilities with clear accountability for each: the developer and buyers for capital ownership and physical asset, the hotel brand for operational management and service delivery standards, and the brand licensor for brand equity maintenance and the quality controls that determine whether the brand name retains its premium-generating power.

Standalone Branded Residences: The Emerging Structure

A significant structural evolution over the past five years is the emergence of standalone branded residences: residential projects that carry a hotel brand's name and service platform without being physically integrated with a hotel. Noted by Knight Frank as a significant growth segment in the branded residences market, these projects allow developers to access the brand premium without the full capital commitment of hotel development.

The standalone structure is not right for every market or brand. But in markets where an established hotel already exists and the developer is adding a residential component nearby, or where the brand's equity is strong enough to support a residential premium without a co-located hotel, the standalone structure can generate compelling returns on a more focused capital commitment.

For the feasibility framework that determines whether a branded residences project can support its capital structure, see hospitality feasibility insights

For the development execution risks that most commonly undermine branded residence programs, see hotel development mistakes

The Market Position for Branded Residences in 2026

The branded residences market has moved from a niche product category to a mainstream component of luxury real estate development in most major markets. Buyer awareness and appetite have grown as the product category has matured. Institutional investors are increasingly comfortable with branded residence underwriting as a component of mixed-use hospitality investment. And the operational infrastructure has become more standardized in ways that reduce execution risk for developers new to the category.

The premium is not unconditional. As the supply of branded residences has grown, buyers have become more sophisticated evaluators of what specific brands and locations justify the premium they are asked to pay. The developers generating the strongest outcomes are those who have been most rigorous about matching brand selection to market, pricing to genuine comparative value, and governance architecture to the long-term protection of buyer investment.

Billy Richards

The Premium That Pays for the Hotel: A Branded Residences Strategy for Developers and Investors